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Just five per cent of Canadians own cryptocurrencies, according to a survey  the central bank conducted in August and September 2019. That’s about the same percentage as from the bank’s 2018 study. (The Logic)

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Talking point: The Bank of Canada has repeatedly said widespread use of cryptocurrencies and abandonment of cash could prompt it to to issue its own digital currency. In October 2019, The Logic reported the bank was exploring issuing a coin that could share information with police and tax authorities. Cryptocurrency usage staying flat bodes ill for a prompt rollout. Similarly, while the number of Canadians who stopped using cash is up to 10 per cent, from seven per cent in 2018, that doesn’t appear to be enough of a drop for the bank. “Despite an overall decline in daily transactional use, cash remains important to many Canadians,” reads the study.

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The bank lowered its overnight rate target by 50 basis points, from 1.75 per cent to 1.25 per cent. (The Logic)

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Talking point: The cut comes one day after the U.S. Federal Reserve reduced its rate by the same amount and G7 finance ministers and central bankers promised coordinated action to address the economic impact of COVID-19. This is Canada’s first rate cut since 2015, and is designed to reduce the “material negative shock” of the virus. However, the long-term economic impacts on the Canadian economy remain to be seen. Firms are adding COVID-19 risk to their earnings disclosures. Companies including GM Canada and Tim Hortons parent firm Restaurant Brands International are limiting corporate travel. Ottawa-based Shopify cancelled its upcoming conference, as has Toronto-based Vena Solutions, which was planning a 500-person conference in May.

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The central banks of England, Japan, Switzerland, Sweden, Canada and the eurozone, along with the Bank for International Settlements, intend to share information on digital currencies with each other as they consider launching government-backed digital money in their respective regions. Bank of Canada spokesperson Josianne Ménard told The Logic, “We are doing extensive research on this topic.” (The Logic)

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Talking point: The banks are banding together as China gets increasingly close to issuing its own digital currency and Facebook’s digital offering, Libra, is losing backers. Today, British telecom Vodafone backed out of Libra, the eighth firm to leave so far. In October 2019, The Logic broke the news that Canada’s central bank was considering launching its own digital currency that could share information with police and tax authorities. At the time, the bank said it hadn’t yet decided if it would launch it. Canada has played a leading role in previous international collaborations around digital currencies. Stephen Murchison, who led the Bank of Canada’s research into digital money, also chaired a report on financial innovation and fintechs for the Financial Stability Board, with which this new central bank group will be working closely.

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The bank posted a 3.5 per cent earnings increase for 2019. Adjusted per-share earnings for the fourth quarter were $2.22, five cents short of analysts’ expectations. However, the bank announced it had made connections with 3.2 million Canadians via apps developed under its RBC Ventures initiative. (The Logic)

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Talking point: RBC is hoping to turn app users into bank customers via an aggressive push in 2020. In June 2018, the bank announced a plan to get 500,000 new customers in five years via its ventures subsidiary. So far, it’s made about 50,000 conversions without much marketing spend behind the 17 ventures it’s launched. Fourteen more are under development. Capital markets profit dropped 12 per cent and investment banking fees are down 17 per cent. The bank also spent $113 million on severance-related costs in the quarter as it made cuts in Europe and Australia. RBC is not the only Canadian bank cutting staff: on Tuesday, BMO reported a $484-million restructuring charge, mostly for severance payments.

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The Ottawa-based artificial intelligence startup will monitor transactions and block suspicious ones as part of a proof-of-concept exercise. The bank will publish a report after the pilot is completed. (The Logic)

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Talking point: The move comes one week after The Logic reported the bank is exploring launching a digital currency to collect more data on transactions than is possible with cash. The MindBridge pilot allows it to gather more information on existing digital payments. It’s also the bank’s latest move to prepare for a digital coin following the first-ever transfer of a digital currency from one central bank to another, which it conducted with Singapore in May. For MindBridge, this is the latest sign of the federal government’s favour. In June, the company raised $14.5 million from the Strategic Innovation Fund. In August, the company hired Alex Benay, formerly the federal government’s chief information officer.

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The bank pointed to encouraging growth in the second quarter as a reason for keeping the rate, but said it expects economic activity to slow down in the second half of the year, citing the U.S.-China trade conflict and its negative effect on global trade and business investment. The rate will be updated again on October 30. (The Logic)

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Talking point: The decision comes as banks around the world, including the U.S. Federal Reserve, are cutting their interest rates as a response to slowing global growth. Holding interest rates steady is a sign that the bank believes Canada can withstand that pressure for the time being. Canada’s GDP growth increased to 3.7 per cent last quarter, which is the highest rate since the same period in 2017, but most of that growth was tied to exports, an area that’s especially vulnerable to the China-U.S. trade war, Brexit and worrying signals of a global economic recession. If the bank lowers borrowing rates in an effort to insulate Canada from those pressures, it risks elevating levels of private debt, which remain high after reaching record levels in 2018. Most of Canada’s exports are tied to the United States, where domestic spending remains strong. That could help cushion the country’s economy from the effects of decelerating global trade, although there are some signs that exports are already dropping. New data from Statistics Canada released Wednesday showed a 0.9 per cent decrease in exports in July.

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Snobar, executive director of Ryerson University’s DMZ, and Bennett, former Newfoundland finance minister, are joining BDC’s 13-person board. Suzanne Trottier, capacity director with the First Nations Financial Management Board (FMB), is also joining. (The Logic)

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Talking point: Each of the three new directors have experience in areas the bank is increasingly focusing on. Bennett is a board member of SheEO, an accelerator and network promoting funding in women-led companies; in July, BDC CEO Michael Denham said his bank’s $200-million fund for women entrepreneurs is a priority. Snobar runs one of Canada’s largest accelerators, which has a founder-first mandate and spends a lot of time trying to remove pain points for accelerators. BDC is investing in technology that helps entrepreneurs get loans approved quicker; in some cases, $750,000 loans can be approved in 30 minutes. The bank is also stepping up efforts for Indigenous entrepreneurs. It currently has $350 million committed to clients in its Indigenous banking section, but is looking to significantly increase that with a new $100-million Indigenous Growth Fund. Trottier’s experience may come in handy during the expansion. Her team at FMB works with more than 200 First Nations governments on financial management.

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The bank raised its second-quarter growth estimate for Canada to 2.3 per cent, up from 1.3 per cent, citing some “temporary” factors, such as a surge in oil production. It cut its global growth forecast for 2019 to 3.0 per cent, down from 3.2 per cent due to escalating global trade conflicts. (The Logic)

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Talking point: The bank’s confidence in the domestic economy, at least in the short term, follows a string of positive economic indicators in recent months. Canada added 27,700 jobs in May and a record 106,500 jobs in April. Its unemployment rate fell in May to its lowest level since 1976. Aiding the positive outlook—along with what the bank calls a healthy labour market—is the bank’s view that Canada’s housing market is cooling off, as well as the loonie being the top performing G10 currency this year. But, while the recent job growth mostly came from full-time positions, much of it was from an increase in self-employment, which can be more precarious for workers and the economy. And, the bank said that trade tensions between the U.S. and China in particular are negatively impacting manufacturing as well as investment, and is pushing down commodity prices globally. Those impacts continue to cloud the Bank of Canada’s overall outlook, spurring it to remain cautious in its view for Canada’s economy.